tv Charlie Rose PBS August 13, 2013 11:00pm-12:01am PDT
>> rose: welcome to the program. we begin this evening with corporate intrigue, the story of bill ackman and the fight for control of j.c. penny. .>> we collectively decided on ron johnson as the c.e.o. of the business. we put him in place. i'm not the c.e.o. of j.c. penny. i haven't made day-to-day decisions in the company. my job is to make decisions about hiergs and firing c.e.o. and long-term strategic direction of the business. the media, because we are probably the highest visibility person on the board, when j.c. penny was-- you know, when the stock went two 20 to 42 on ron being hired, we got too much credit for that. while i actually helped the
company recruit ron johnson, it was really the collective decision of the board to bring him on, when when the business failed i probably got too much of the blame for recruiting ron. but that's okay. that's the risk of my business. >> rose: we conclude this evening with golf and the story of jason dufner who won the p.g.a. championship this past weekend. >> people don't realize it's the best in the world, it's the best of the best. it's not the best in your region or your country. it's from the whole world, these are the best at what they do, and you have to be-- you know, sometimes it's 90 guys, sometimes 156, like the p.g.a. you have to beat all of those guys that specific week to get one of them, and i think that's the real challenge in capturing these majors. >> rose: ackman and dufner when we continue.
billion-plus investment fund has been instrumental in turning around some of the world's most powerful brands. among them are proctor & gamble and burger king but he has made controversial investments. he placed a bet against herbalife. he claims it's a pyramid scheme and wants the government to shut it down. he is currently involved in the struggle over j.c. penny. he has been vocal about management changes he want to see at the top. today he announced he is resigning from the board. let's talk about j.c. penny. first of all, why did you become the bickest stockholder in j.c. penny. what did you think you could do which you have not been able to do? >> sure. so j.c. penny is one of the great companies -- part of the history of america. it's been a struggle, really, for the-- it peaked, perhaps, in the late 80s, early 90s and
has been in decline since then but because of its history it has incredible assets. it has 1100 stores in a lot of very good locations around the country. it has a great brand known by every american. these are assets very difficult to replicate and a revenue base of customers that come to j.c. penny. the problem is profits have declined and revenues have declined as some combination of wal-mart, target, others have taken the share. >> rose: how about management? here's what you did. you hired ron johnson, who was in charge of the apple retail stores and had been instrumental in creating that whole very successful operation. and the judgment seems to be he did not only turn the company around. he made it worse. >> understood. so the history here is is -- >> you're the guy. >> he's the guy we believed in and thought he had great ideas. i'm not the only guy on the board who believed in ron johnson. the board was very supportive
bringing in ron as the c.e.o. >> rose: what happened? >> what happened is took a brilliant guy with a lot of creative ideas and terrific experience-- ron didn't just do a great job at apple. he did a fabulous job at target. he tried to make a lot of dramatic changes to the company. >> rose: too fast, too quick? >> probably too fast, too quick. retail is a difficult business to begin with. i think the customer takes time to understand how a business has changed, and we also did it in the public eye, which draws tremendous scrutiny and i think it made it more difficult. >> rose: do you believe he could have made it if he had more time? >> i thinks had ideas are fundamentally correct, not all of them, but the big ideas. he's left us with the best-looking stores we've had in many, many years. >> rose: he changed the look of the store. >> the look of the store, the shopping experience i think is a better experience, there are new brands that have come in. i think the most negative change he made in the short-term, which i think is right in the long-term, he took away the
coupons ancoupons and discounti. >> rose: basically making argument we'll give you good value all the time and don't be fooled by all the sales talk that exists in so many stores. >> interestingly, people seem to be happier buying something at 50% off for $50 as opposed to having it marked at $40, and there being no discount, which is sort of an interesting psychological phenomenon. >> rose: the second thing, so he's fired and you replaced him, he is replaced by-- >> i don't control j.c. penny. i'm a large shareholder. >> rose: gl you're the largest stockholder. 17% of the company. >> that's right, but it doesn't give me the right to control the company. i'm one aboard member of 11 directors until this morning when i stepped off. >> rose: we'll get to that. before you did that -- >> the answer is we had to make a change. we brought back mike coleman, the previous c.e.o. mike had retired. mike is in his mid-60s, and we knew we had to bring in a
long-term c.e.o. and mike was brought in as an interim, stablize the company, and i thought recruit the new c.e.o. fix the business over the long term. >> rose: was that his understanding of what he was going to do? >> yes, yes. >> rose: okay. so then you write a letter to him-- or you write a litter to the board that you release saying that he should be replaced. i mean, people-- howard schultz. mike is working tierslessly to save the company and it is despicable of ackman to leak a letter asking for his removal. the the irony ackman himself has ever step of the way severely damaged the company. i thought it was disgusting when i saw what happened on thursday. i'm distraught. has blood on his hands for being the one who brought ron johnson in. as someone who runs a public company i'm speak on behalf of people whose livelihood can be
destroyed. >> i have never spoken to him, he is a good friend of mike alman, who sit on the board. the reality showard schultz, when-- when they brought in the c.e.o. of starbucks, and things were going poorly, howard schultz wrote a memo to the board that was leaked to the press and it ultimately led to the replacement of jim donald with howrld schultz. >> rose: he turned it around when he came back. >> he did an absolutely fabulous job. why did the memo get leaked to the press? my strategy is-- who we do is use the public spotlight to ultimately put pressure on companies to do the right thing. as a director i have never released a public letter to the press. in the board room i'm active. outside the board room i'm very quiet about what happens in companies but j.c. penny in the last few months made a number of decisions or didn't make certain decisions we thought were important and critical. i worked within the confines of the board room to address the concerns about the change in leadership. when it was unsuccessful i felt
the right thing to do was air my thoughts publicly, not by leaking a letter to the press but writing an open letter to the board. that highlights the issues for the owner of the business. i'm a representative on the board of the owners of the business. the owners of the business don't know everything that's going on inside the company and i wanted their feedback on what was necessary in order to fix the business. by releasing a letter to the press that talked about succession issues, inventory management, cost controls, what i've achieved is focused the owners of the business-- and frankly the management and the board-- on these very, very important issues. and i think the message has been heard loud and clear, and then i negotiated a resolution so that-- the only negative of doing that, of course, is you get a bit of a media circus. that's not good for the company long term. within 48 hours we came to a resolution, bringing two new directors to the board -- >> and you getting off the board. >> i'm getting off the board. i've achieved all i can achieve on the board. i think we can restore peace in
the board room. >> rose: but mike stays. >> mike is in as interim c.e.o. there is a search progress prs under way. hopefully that will identify a good long-term c.e.o. for the business. if i may, you think about boards of directors and how they operate, very often when there's a board member on the board not happy with decisions being made by the company, he or she might voice those concerns inside the board room, but if they're voted down what they normally do is step off quietly. if you think about the financial crisis, let's say you're on the board of lehman brothers and unhappy with the amount of leverage being used or the risk being taken, none of the board members went public with the concerns they simply probably just resigned from the board. and i think the other markets are better if directors are willing to take a stand and say, "look, i'm concerned about steps the company is taking in its business." that's what i did here. >> rose: you want to be the champion of transparency? >> i want to be the champion of shareholders-- i'm a representative of the shareholders and i want to be a champion of the company and shareholders and when i'm concerned about the direction of the business i'm not afraid
toator corporates. i'm a very straightforward person. i say precisely what i think and sometimes it rubs people the wrong way. >> rose: you are a lightning rod and get engaged in all of these public disputes with people, dan low, herbalife, we'll talk about that. carl icon says, "he's like a cry baby in the school yard. i went to a tough school in queens and they're used to beating up the little jews boyce boyes. he was like a little jewish boy crying." .>> if you look at our history over 10 years, i'm not used to getting into disputes with people. we have been a very constructive shareholder of a meaningful number of companies over the last 10 ypr)s. most of this comes from a battle i'm having with herbalife. in the case of herbalife i'm not a shareholder pushing to make a business more valuable. i'm a shareholder who has made a belt that the business will fairly. we short the stock, and what we are doing is we believe
herbalife is operating a pyramid scheme. we believe they're transferring wealth from a very large number of low-income, principally hispanic individuals in this country and around the globe to a handful of wellie people. >> rose: it's moral outrage? >> it is certainly moral outrage. we're spotlighting the company, so the sec, new york attorney general, the federal trade commission, and f.d.a., apparently, there's a story today in today's "times" online about a subpoena that had been received. but the bottom line is we are highlighting problems at the company. carl icahn is someone that years ago-- 10 years ago i made a deal with that he ended up breaching a contract i had to sue him to perform, ultimately collecting after eight years, so he's not happy making me pay money he owed and he's used this herbalife investment as a platform to get back at me, and he's had other powerful allies that have joined in.
>> rose: like? >> dan lobe took-- made an investment briefly and sold the stock. >> rose: he thought the stock would go up. >> correct. >> rose: and it did. >> it did, absolutely. >> rose: so he made a good investment. >> sure, sure. i'm longer-- i'm not a trader. what we do is we take large, concentrated positions, generally very well-known companies and work with them for years. we took a stake in general growth in the middle of the financial crise purchase the stock at the time was 34 cents, we worked with the board and convinced them to put the company into bankruptcy, which was an unusual thing. we helped the company restructure their debts, we recruited a new board of members, i stepped off the board and the 34 cent stock today is worth $34 about five years after we made the investment and the shareholders have made 100 times their money. there are not a lot of people upset with me about that particular situation because everyone wins. the problem with shorting stocks is that there are going to be some large number of people who own the stock who are not going to be happy and the c.e.o. of
the company is not going to be happy with you. >> rose: well, you know, there are people also who accuse you-- some people make smart investments in which they short a company because they believe the company intrinsically, it has-- is going to have earnings problems and stocks can go down and they'll look like the wisest of investors. there are others who believe that people invest and short and then go out to destroy the company themselves. where do you fit on this? >> we don't go out to destroy companies. we short very few stocks. this is the second large short i have made in 10 years. the last one-- last time i was on your show, perhaps, we shorted a company called m.b.i.a. it had a a.a.a. rating. it guaranteed mortgages and other kinds of financial obligations and was creating a lot of risk in the financial system, and we short the stock and disclosed publicly our concerns about the company's balance sheet and the risk it was creating for the capital markets. the benefit of short sellers to the markets is they're sort of
the canary in the coal mine. an early signal about a problem in the business, a problem in the capital markets. we spent millions of dollars doing research on herbalife, research that the government, frankly, on a speculative basis probably wouldn't do on a company like this. we provided all the information to the sec, federal trade commission, various states attorneys general. helping them do their work. if madoff had been a public company we probably would have shorted it, if we had done the work, and the benefit of the of of that to the markets is we can steer people away from financial frauds and businesses which harm people. >> rose: do you respect dan lobe? the answer is i think he's had a good track record. >> rose: as an investor. >> yes. >> rose: but you respect him? >> i'm disappointed with the way he handled the herbalife situation? >> rose: whyy are you disappointed? >> he bought a stake in the company, put out a letter saying how great the business was, set a target price in the 70s . >> rose: do you believe he
believed in that or not? >> he told his stock a few weeks later. i think if you're going to go out publicly-- in herbalife we've gone out publicly saying the business is operating an illegal pyramid scheme. we believe they're violating the law -- >> where is the government in all this? >> that's a very good question. the story that came out in the "new york times" today, it sounds like the government is looking into product quality issues, at herbalife. our focus on herbalife has been the money transfer elements of the pyramid scheme. unfortunately, pyramid schemes don't care particularly much about the quality of the product they're selling to people and the product they sell is a product people consume and there's a story on the "new york times" online-- i think it will be in tomorrow's paper, the physical paper-- talking about problems of metal contamination in the products which can threaten people's health. short sellers are often viewed as the villains of the capital markets but i think if actually the s.e.c. followed around the jim chainoses of the world, a
well-known short seller, focused on the problem, that would be a bigger -- >> biggest investor in china. >> don't know. >> rose: why is the stock going up? >> because carl icahn and others have been promoting it. ultimately -- >> meaning the people in the investment communities believe in carl icahn more than they believe in you jool certainly on this investment that's the case. ultimately, investors are only as good as their track records. if you were to look at our track records over the last 10 years, we have one of the best records in the investment business, boor none. on herbalife today the market is saying we're long, but simply because the short term-- what the market tells you in the short term is what a certain subset of people believe. that doesn't mean they're right. in m.b.i.a. we were short for seven years before the stock went from 73 to 3. >> rose: what finally happened to cause it to go to three? >> the markets woke up. >> rose: they came around to your point of view and sold and
you came out a hero. >> they started reporting meaningful losses and had to raise capital at low prices and that ultimately caused the stock price to go down. in the short term-- there's a famous expression-- in the short term the market say voting machine. people vote one way or another. long term it's a weighing machine -- >> that's why they call it value investing. >> right. >> rose: they're not looking at what the stock is going to be tomorrow or the next day, looking at whether it's a good company or not, is it a good value or not? let me just talk more about you. you have been very successful. you started with $50 million. it's now $11 billion. >> uh-huh. >> rose: that's a pretty good groarkt i would suggest. >> sure. >> rose: target, another retailer. what happened there? what was the result there? >> . >> you're going to not my greatest hits. you're focused on my worst hits. >> rose: you just mentioned one, mbia. that was a greatest hits wasn't it? >> that was one of the best investments we ever made.
30 million became a billion and a half. >> rose: that's a hit. >> that's a hit. >> the answer with target is we took a stake in the company. we admired the management. we liked the business but we thought they had a large amount of exposure to the credit card-- to their customers -- >> you wanted them to eliminate that. >> that's right. and we approached them in the summer of 2007 and said, look, fabulous business. your stock trades at a lower multiple than your peers because people are nervous about your credit card exposure. you can sell it to a handful of financial institutions. they will pay you fees for continuing to recruit customers. you can take the $8 billion and reinvest it in your business. your stock will go up, you'll have less risk in the company, and that will be a win. that was a meeting we had privately with the management of target and they seemed to love the idea. they asked us not to share our thinking publicly. and ultimately, the company did not execute on our advice. the financial crise hit. the stock went down from 55 where we had bought it to at one
point $25 a share, and then over time, the stock rose back to the mid-70s today, and i think in the last year or so, they finally got rid of their credit card assets. >> rose: you were long gone. >> we bought in the mid-50s, we existed in the mid-50s. we ended up losing a proxy contest. one of the methods we implement our ideas if we are unsuccessful in convincing management is by going to the shareholders. >> rose: do you worry-- i mean this seriously-- do you worry you're getting an image that's not necessarily helpful? >> yes, of course. >> rose: that bill ackman is in there-- what they used to call takeover artists. he goes in to buy a company so he can pump up the stock and sell it and get rid of it. image, not reality. >> let's talk about image. let's talk about facts. if you look at every investment, we made 26. 23 of the 26, i think, are best described as home runs. i could walk through each of them, if you'd like. every investor made a fortune.
we've had a few disappointments. i think j.c. penny is a disappointment, obviously. >> rose: target was a disappoint. >> target worked out for investors. and borders, management asked us to help, when the business got in trouble we go of did our best, but the wind of change harmed us. but, you know, investing is not a business where every investment is profitable. i would argue our batting average is extremely high. >> rose: i if you were to talk to the shareholders of canadian pacific i think they would give you universal appreciation for what we accomplished. it was the worst-run railroad in north america, the last 10 years. the stock was 46 at the time. we took our investment in the company. we bought a 14% stake in the business. we ended up replacing management with a guy naiment hunter harrison, the greatest railroader of all time, and it is becoming quickly the best railroad in north america. the stock almost tripled the last two years, and everyone is happy. not every investment we're -- >> warren buffet made a huge
investment in railroads, too >> railroad business is one of the great businesses of the world. >> rose: why is that? >> first of all, they're not going to build a new one. if you own the second largest railroad in canada -- >> that was what-- >> that's canadian pacific. it's an asset created 150 or 60 years ago and you had-- the government granted a bunch of land, and the replacement cost of the railroad is, you know, hundreds of billions of dollars. >> rose: and it's cheaper to ship by rail than plane. >> that's right. it's more efficient. it's better for the environment. if you think about the trucking-- shipping we truck, you know, the taxpayer pays for the infrastructure. the roads are taxpayer expense. in rail, the railroad pays for the infrastructure. the railroad pays for the rail and the ties. it's good for governments running out of money. it's good for efficienciy. it's good for the economy. i think because we're so high profile, we're going to attract some contributio critics.
when you short a stock there are a large number of people on the other side who don't like what you're doing. certainly the company is fighting back. >> rose: characterize yourself. there are people saying he's the most optimistic guy, he believes, he prevails, all of that. >> i've seen very few people accomplish something unless they're an optimist. in the investing business you need a high degree of confidence but you also need a high degree of bum helness and you have to balance those two. >> rose: where is the humbleness. >> humbleness comes from mistakes. j.c. penny has been a big disappointment and you learn from mistakes like that. general growth has been an incredible success. you need to do a sufficient amount of research and homework and when you place your bet you have confidence-- a business you can look very silly before you're proven right. i looked very sill nem.b.i.a., and there was a lot of scrutiny in the press -- >> did you ever doubt yourself? >> no. >> rose: did you ever doubt
time. it's a very healthy thing for the market to have someone someone place a bet where they buy 10% of a company, and take a business that has underperformed for 10 years, and bring in a c.e.o. like hunter harrison, and turn around a railroad. that's a great thing for the market, and it's a very healthy thing for the economy. >> rose: is it possible-- take a look at what happened to eddie lampert and sears. .>> sure. >> rose: he combined it with k-mart, first, and obviously, id he hoped he would make it into the next wal-mart which would be a huge payday. he didn't do that. what happened? other than retail is a difficult business. >> i would start with retail is a difficult business. eddie is not a trained retrailer. i'm sure he's learned a lot -- >> and nor are you. >> noram i. >> rose: and you're trying to tell j.c. penny what to do. >> there's a difference. let me explain. eddie is the c.e.o. of sears. >> rose: he became that because a series of c.e.o.s didn't work out. >> that's right. in the case of j.c. penny i became an investor. i don't control the company.
i worked, with the board and alonged side the board to recruit a new c.e.o. when it was time for the c.e.o. to retire. we collectively decided on ron johnson as the c.e.o. of the business. we put him in place. i'm not the c.e.o. of j.c. penny. i haven't made day-to-day decisions in the company. my position is to work with the board and make decisions of hiring and firing the c.e.o. and long-term strategic interests of the company. and that's what i've done. the media, bought bauz i'm the highest visibility person on the board-- when the stock went from 20 to 42 on ron being hired we got too much credit for that. while i actually helped the company recruit ron johnson it was the collective decision of the board to bring him on. and when the business failed i probably got too much of the blame for recruiting ron. but that's okay. that's risk of my business. >> rose: here's another issue that comes up in these kinds of things. it is that-- you know, you're
about transactions. you know, you want to buy and then you want to sell and you want to make a huge profit. it may be you want to buy for 10 years, 15 years, sell after 15 years. but it's a transactional thing, rather than spending a whole lot of money to really run a business and create a product and do all those kinds of things-- you know the argument-- even paul volcker has made this argument. too many people are going to wall street, too many smart people and work you, and it's all about transaction. .>> i don't think -- >> not about building something >> let me-- let me take a counter to that in terms of what we do. we're not about transactions at all. in fact we do very few transactions, maybe one or two a year. >> rose: you're not a pure trader. >> we're not a trader at all. we don't trade. we buy a stake in the business. we get actively involved in the business, work to make the business more valuable-- by the way, pretty much everything we've ever owned, with the exception of borders, has a higher value today than it did after we sold it which means the impact we've had on the business
has been positive. i'm also the executive office of a business, chairman of the board of a company called howard hughes. it's a business i created, taking southeasts, sticking it into new company, recruiting a management team, building a board of directors. in new york city we own the south tea port. the management team, they got approval to do a new-- they're going to completely transport the seaport, do a new development there. we're building a new shopping center in las vegas. we're changing kind of the landscape in hawaii with a 60-acre development, so these are companies building and adding enormous value and a business that would not have happened were we not to have taken a stake in general growth and spum off that entity. >> rose: what about procter & gamble? >> . >> great company, 175 years of generally fabulous successes. >> rose: great brand names. >> the last four years have been
very difficult for the company. >> rose: and you came in adamant to remove bob mcdonald. >> it was time. >> rose: he hadn't been there that long. >> he was there four years. >> rose: that's not a long time. .>> he had been with the compay fair long period of time. because most of the capital in the stock market is passive, investors can't themselves make these kind of changes. they rely on someone to take a lead, which we did on procter & gamble-- by the way, in procter & gamble i worked very quietly with the lead director. we would speak periodically. it was only when we felt it was time i made public presentations about the concerns atp &g. that stock -- >> a c.e.o. has come back, one of the legendary names. >> i think he's going to do a great job turning the business. he's working on recruiting the next founder of the company. i got enormous number of phone calls from procter & gamble alums thanking us for the work we do atp apositiv atp & g.
that's been a great thing not just for a wealthy family, but the pens funds that owned the stock. >> rose: so what's the drive for you? what's the motivation. >> rose: one, i think what we do is important. i think. >> you're making companies stronger because you come in and you have a certain amount of power because you have a certain amount of investment, and, therefore, you would like to say that if you look at your track record, you do much better making companies stronger than you do weakening companies in any way. >> that's absolutely true. i don't think anybody would accuse us of weakening a business. j.c. penny-- not every investment is going to work out. there was more risk in j.c. penny than pretty much every
other investment we made, because of the nature -- >> what was the attraction for you, there was more risk. >> the potential for reward. >> rose: the reward is simply how much money you make for you? >> no, i don't need more money. i'm not motivated by financial returns. i'm motivated by i want to have a great track record. if you look at buffet he's had-- whatever-- a 60-year track record. i've got-- i'm 20 years, in but the record's been good so far. i'd like to have one of the best track records . >> rose: what's the annual growth? >> i'm not allowed to comment on returns. that's an s.e.c. restriction. you can look around. i'll tell you they're quite good. what i like-- i've done a lot of philanthropic work over the last number of years. i think i make a much greater contribution through what i do in my for-profit activities than the nonprofit. >> rose: you ask you signed a giving pledge. >> that is true, that is true, that is very true. >> rose: meek you are not going to leave it to your
children pup are going to leave half at least-- >> well more than half. more than half. i think what people forget is, you know, wall street has unfortunately the last-- certainly since the crisis, has goant a pretty bad name, but with the is probably the biggest engine for job creation, enabling business to access capital, enabling businesses to grow. you look at howard hiewgd hughea creation out of thin air. it's a business that will employ thousands of people, create a ton of jobs. >> rose: do you think the criticism of mitt romney during the campaign for his activities in running a private equity firm were fair? >> yes, yes, absolutely. i think good, private equity investors create a lot more economic value than they destroy. >> rose: and grow more jobs than they save? >> they grow a ton of jobs. >> rose: the same jobs that would be gone away. >> the biggest problem with private equity, there is a period when they use too much leverage and put too much
pressure on a business and risk a business' failure. putting aside, that i think the top private equity firms create a lot of economic value. >> rose: too much leverage, and was part of the plem of the economic recession we went through. >> uh-huh. but we're not going to save the country with fill anthropee, but by the fact i'm philanthropic, i don't think that will solve our economic issues. >> rose: what will save the country? >> good economic policies that create the right incentives and an administration that is supportive of the business community. i think that's actually very important. and, you know, policies that will make us competitive globally. ite global economy. the story today i think in's "journal" companies merging with european businesses to move their operations offshore from a tax point of view. we have to have a tax policy that discourages that. >> rose: so you can bring the money home. is that the idea, have a tax policy so the money will come home rather moving it offshore so you don't have to pay taxes
on it. >> the united states is not sis dis similar to the kind of companies we invest in. we invest generally in very good companies that have lost their way. with better management, enormous talent -- >> there was a dying railroad under hunter harrison, and in less than a year and a half he made dramatic changes to the business. the president is the c.e.o. of this business that we call america. and the decisions he makes with respect to, you know, the way incentives are designed, the way he works with congress as a leader in effectueating policy change can make an enormous difference in the growth rate of the company, job creation, in happiness, in our safety. i think that we can't diminish the importance of business and business practices. look at what bloomberg has accomplished as the mayor of new york city. he took his for-profit mentality and has applied it to a city. and i think the city has
accordingly thrived. i'd love to see the same thing happen to the country. >> rose: it's tough management, too. >> and he has the benefit of independence. >> rose: financial independence? >> it's an enormous benefit. >> rose. >> so you're not obligated to anybody. we should only like rich people? >> no, but i think there's a lot to be said to have someone with a business background making decisions about the economy. >> rose: just because i don't quite understand this, is hedge fund performance down? >> yes, if you look at the overall statistics, yes. >> rose: and why is that? >> the answer is i think there are a lot more participants. i think that there have been -- >> so it looked like it was just a sweet place to be, and it's less sweet now. >> it's become a much greater percentage of the amount of capital invests and the scale by just the math makes it harder for that capital to grow at a high enough rate. i think there's been regulatory change that made it harder for
certain kinds of hedge funds to make money. it used to be that, you know, people could-- you hear of hedge funds that would just ask enough questions that they would get answers ahead of the market, and there was some bad behavior that took place, and the government put -- >> you've had some insider trading issues as well. >> and i think the crackdown has taken away bad returns from the business. but i think the biggest driver has been the fact that the business has scaled. but, look, it's just like the mutual fund industry. as a collective, it's not particularly attractive place to invest your money. but there are a few very good mutual fund managers who have done a lot better than the market over time. the same thing is true for hedge funds and investors in real estate. >> rose: if you weren't an investor, what would you be? >> that's a good question. i would do what i do now, even if i weren't compensated for doing it because i think it's a way for me to make the biggest contribution they can make look, i think about government,
ficould, if i could effectuate change the same way i can effectuate change in the private sector but i think i can have more influence as a private participant than a public participant. >> rose: thanks for coming. >> sure. >> rose: bill ackman. back in a moment, stay with us. jason dufner is here. sond we won the p.g.a. championship at oak hit countryclub in rochefort, new york. the victory was his first major title. his four-day performance was consistent shot making and a brush with history. he shot a 63, tying the record for the lowest round in all majors by all golfers. he posted the lowest score in five previous majors at oak hill. i am pleased to have him here at this table. welcome. >> thank you. >> rose: you have beenv to be tired. this is probably the tenth interview you've done today. >> absolutely. >> rose: do you have more after this? >> no. >> rose: i'm glad we had you
at the end today. this trove se90% replica of what the original trophy look liked and is. >> correct. yup, that's mine for-- forever and ever. >do you know where you're going to put it? >> we're building a new house right now in alabama so we'll find a special place for it. it's something you want to share with people. >> rose: the place you went to college. >> yes. >> rose: how long have you wanted to be a professional golfer? >> probably since i was about 14 or 15. you know, i was lucky to be kay country club where they had a tour event and i just thought it was great, i got to come out, watch these guides, what they did and i was amazed how talented they were and how much fun it looked like to be out there on the tour. >> rose: but did you show early promise? in other words, are the people who become want jason dufners of the world, they show at age 11, 12, 14, that they've got something, some combination of talent and will that places them
above everybody else among their peers. >> yeah, you know, for me it was a little bit different. i played other sports. i was very competitive in a lot of things di, which i think was good for golf, but i didn't show a lot of greatness in golf. it took me a while. i walked on when i went to auburn to play golf. i struggled when i first started playing neez mini tours. >> rose: did you make the team? >> yeah, i was on the team. but i walked on. i walked on my freshman year. i played my freshman year some events but it was always a progression for me. i played the mini tours. i got my p.g.a. tour card one year and fell back off the tour for a couple of years. it was just a steady progression, you know, almost like one foot in front of you, one 1 step at a time for me over the last 13 years. >> rose: did you have rare natural ability when you look at your own game and how well you have conquered the game. >> yeah, you know, i think one thing that was really good is i had some athletic ability. i was fairly good at other sports. and, you know, if i saw thins or
i learned how to do things in golf i could pick them up easily. i was a quick learner. i was a quick study and i think that's what helped me become better and better each year. >> rose: the p.g.a. is one of the majors, u.s. open, british open, masters, and p.g.a. ever golfer's dream is to win a major. jack nichols had 18, tiger has 14, you have one. what's different about a major? >> you know, the thing that's the toughest about the majors i think is each of those events are usually played on very, very difficult golf courses that really test all aspects of your game physically and mentally. and the field you're playing against. people don't realize it's the best in the world. it's the best of the best. it's not the best in your region our your country. it's from the whole world, these are the best at what they do, and you have to beat, you know, sometimes it's 90 guys, sometimes it's 156, like the p.g.a. you have to beat all of those
guys that specific week to get one of them, and i think that's the real challenge in capturing these majors. >> rose: you shot a 61 eye mean, a 63, which is the lowest anybody's ever shot in a major. you tied the record. i think about 18 people hold that. i'm not sure what the number is. what happens when you are playing golf that well in a big tournament on an amazing course? >> yeah, you know, everybody out on the tour has a day like that or a couple of days like that where everything goes right -- >> are you in a zone? basketball players will say, you know, that the rim looked like it was that big. >> the cup didn't quite look that big. if it did, it could have been a lot lower. but you're having one of those days. everybody on the tiewrk i think, has those days. sometimes, unfortunately, those days might be at home when you're playing with your buddies. the -- >> and you can't will them, either. you can't say what it is that makes a day, i'm going to get there. >> that's the neat thing about
golf. you wake up every morning when you are playing tournaments hoping that one of those days will be today and lucky for me it was last friday in a major championship. >> rose: after that, did you say this tournament is mine? >> no, you know, the next day was tougher to be honest with you. saturday was really tough. just because i had such a great day on friday. i played so well. and all these-- you know, i had all these requests and all this hype about the 63, and you want to come out the next day and you're antsy and anxious about how is this going to go and i really had to focus hard and dig deep that day to stay in contact. >> rose: going into, let's say-- on the 14th home hoel, where did you stand, do you remember? >> two up. >> rose: two up. and what did you do the last four holes. >> i played them two over. >> rose: if you played the last two holes even we're look at a 61 in a major. >> on friday? >> rose: yeah. >> i played the last-- i was six
under. so i made one birdie coming in. i needed one more. >> rose: one more birdie would have given you the record. >> rose: how close did you come to the bird gee i had a 12-footer on the last hole and it was probably the worst of the day. to be the first to do something. >> rose: could you get it out of your mind? >> when i stepped on the 18th tee i realized where i was, hit a great drive and unbelievable shot. >> rose: you come to the 18th and say birdie this hole and i have a record. >> something nobody has done in golf. it was a challenge for me to stay focused and not get nervous and i did well until the last 12-foot putt. i looked like i had never been there before because i hadn't. maybe next time i'll have a better chance. >> rose: you have found out in 2011 you had a collapse, which you could have won. and did you look at that and say, fiever have this
opportunity again i'm not going to do this? >> yeah, you know, at the time tifs disappointed, but all the at that point in my career i wasn't established as a player. i took a lot of positives from it but you also never know how many chances you'll get to win these majors. there are only four of them a year like we talked about earlier. and they're really hard to win, and i just-- i felt like maybe that was the only chance i'd ever get to win one. but luckily i've had a couple of other chances here as of late and this time it worked out. >> rose: in all those ways they measure performance on a golf course, how many greens you hit, how many putts you take. you had a whole number of holes in which you one-putted. >> yes. >> rose: that's pretty good. how are you off the tee? >> i'm in the 290 range but hit it pretty straight. >> rose: you're not spraying it everywhere as some of the heavy hitters do. >> no, even my bad ones are pretty good. >> rose: pretty straight. what's the secret to that?
>> i think just the consistency of my golf swing, understanding what i needed to do to get better a couple of years ago with that. >> rose: so what did you do a couple of years ago to get better? >> i started working with a guy in austin, texas, chuck cook, who really helped me understand -- >> what did he teach you to understand. >> my club face was really strong, really shut, which made me do some things with my body -- >> it was closed. >> yes, it was really hard to play golf that way. that was a big change, and it just became easier for me when we understand club face relation, and swing place reaction. it's analytical in my practice. i need ton what is making the ball go sideways or left or right. >> rose: this is a stupid question, but what is the mistake good amateurs make, the difference that separates good players, not just people like you who win tournaments. what is the mistake they make? >> you know, short game. >> rose: really?
don't pay attention. >> don't pay attention. and practice. it's hard for people to find the time to practice. i would suggest anybody out there that wants to get really better at their golf game really focus inside 30 yards. you can save a lot of shots. a lot of the amateurs we play with have a lot of three-putts, four-putts, chips that don't get on the putting surface. that's the way, to improve your score and lower your hap. >> rose: what you have is a repeatable swing. as you said to me this morning. you know your swing. you can repeat it every time, and, therefore, you never get too bad one way or the other. >> right. un, i'm always pretty consistent. i've had a good record over the last four years. i haven't had too many missed cuts in there. when i have missed cuts, i've always had a chance to make the cut and a lot of strong finishes. >> rose: how much of the game is mental? >> a lot. probably this past week i had i was really strong mentally.
things didn't seem to bother me as much. i was determined to have a chance to win this tournament. bad shots were accepted as in other tournaments you get angry, frustrated. good shots were rewarded, you give yourself a little pat on the back and go to the next hole. >> rose: let's suppose you want to go to the next level, whatever that might be-- winning four majors in one year. what do you have to do to your game to make it better? where is it you think you can make it improve? >> one thing i can get better in is my putting. that's probably the weakest part of my game. if i could improve that i could really take it to the next level, i think. also staying consistent with what has got me to this level i think is going to help me get to another level. you're never really going to reach your potential if you can't consistently work on the same things to make you better. it makes your overall game stronger. i just have to keep doing what i'm doing to win more tournaments. >> rose: how much do you practice? >> it really just depends. sometimes i want to get away from the game. some weeks i won't touch the
club for a whole week. when i got back from the beneficiary open, i had a poor finish there. i got back oia monday and by tuesday morning i was back at the golf course getting ready for these events. >> rose: how do you get ready? >> practice usually involveaise couple of hours of hitting because, a lot of putting and chipping. i play a couple of times a week. it's long days. it's eight- to 10-hour days out on the golf course. >> rose: who has the best swing on the tour? >> i'm now i'm going to say hunter mayhem. >> rose: it looked like the other day, didn't it, with a 61. did he have a 61 or was that someone else? >> i don't even hunter had a 61. >> rose: tiger had a 61, didn't he at firestone. what hicks his swing-- >> he's consistent with it. best driver in the game of golf right now, i think. his iron plays really good. >> rose: in terms of being where he puts it or length or both. >> both he's the straightest and furthest hit or tour the last
couple of years. >> rose: that's where you want to be. >> that's ere you want to be if he could improve his putting he would probably be terrific. >> he's a great player. you're talking about guys who are top 20 in the world, so you're kind of nit-picking when you say you have to improve this or that the. >> rose: that's you, too. where do you rank? >> eighth now. >> rose: who has the best short game? >> probably luke donald is up there. tiger woods, phil mickelson. they're probably all right in the same category. the great thing about them is they can hit so many different shots around the green. bunker shots, high shots, low shots, spin shots, shots that run out -- >> and can get out of danger. >> and can get out of danger definitely. >> rose: do you talk to other golfers much about the game or not? >> it just depends on how friendly you are. >> rose: really. >> you know, guys that you're friends with, guys that you get along with, everybody kinds of shares little tidbits here and there about what works for them,
what doesn't work for them. the thing about golf is it's so individualized. there's not a lot of time to socialize with the different guys. it's not really a team atmosphere. but when you get on the ryder cups and presidents cups is when you start to become closer. >> rose: when did you know you could make it? you won your tour card and then lost your tour card? >> i've always struggled with that throughout my career. when am i really going to establish myself? when i can feel like i belong? definitely now. at least for the next five years. but, you know, in 2009, i started back on the tour, and i had a really good season, played a plot of good golf. from that point forward i've played really, really good. >> rose: what was the difference do you think? >> i just had some good finishes. thins started going my way. i started hitting better shots. i became a better player. once you have good finishes against the best in the world and you know you can compete out there, that's when things really changed for me. >> rose: based on all the
thins you said i assume you would believe if tiger could break through and win a major he'll win more majors. >> i think so. his game this year has been really, really good. he's won five events on our tour, some of the tougher events we played. by his own admission i'm sure he would say he has not played as well as he'd like it's majors. you can't play as good a golf as he does to not win one of these. and maybe that will open the door for him and challenge mr. nicholas' record. >> rose: you're standing on the tee and the guy going ahead of you or after you-- let's say you hit the ball about 290 yards, right straight down the middle, as you suggested, and then the next guy comes up and he booms past you by about 30 yards, 220, 230. what do you say? >> nothing. it happens all the time. that's like getting out of bed in the morning for me. there are some great athletes
playing out there now on the p.g.a. tour. guys are getting bigger and stronger, club head speed is increasing. >> rose: what is your club at speed? >> i get up to probably 112, 113 miles per hour. but you have guys busting 1 ball speed pup have guys busting 180 miles per hour ball speed. >> rose: like whom? >> wonna watson. gary woodland, keegan bradley. all those guys are right up there, 180, 187. >> rose: were you worried about jim furyk who has the most unusual swing but the most consistent game you can imagine >> he's a tough competitor. he has been out there a while. i knew it was going to be a great challenge. grim gym is a great guy. i got to know him through the ryder cup. his record speaks for himself. he definitely wanted it just as bad as i did. i know that fair fact but luckily i was able to play a little bit better that day. >> rose: is it luck at all or is it something else?
>> there's a little bit in it. you get bad breaks, bad bounces, but it seems the guys that are really good make their own luck. >> rose: exactly. in life, too. the idea of those who have gone before you, hogan, what did he teach you? >> that was one of the first instructional books i ever read, five lessons. i learned a lot about the golf swing. the thing i learned most about him is how much struggle he had throughout his life from the time he was a child all the way to his early years of playing professional golf. it was really hard for him. he struggled in a lot of different areas, but he knew that through hard work and preparation and determination and going about it consistently that he could get to where his mind thought that he could be, which is a pretty neat thing in life. >> rose: what did sam snead have? >> sam snead was a natural. he had that great golf swing, fluid, great athletes. you've seen pictures of him
kicking the ceiling. everybody seemed to come easy for sam. that's definitely an admirable trait. >> rose: is professional golf hard on marriage? >> yeah, definitely. i think it can be. it's hard to find a balance. you've got a lot of people to keep happy and you gotta find time, you know, like i said, 8- to 10-hour days of work, of golf, to keep your game sharp against the best of the world. you have to find time for your marriage. >> rose: who was it that gave up winning to go watch his baby being born? >> that was hunter mayhem. >> rose: that's what i thought. >> he just recently did that. >> rose: he won the applause of the world, i think. it would have been like a million-dollar paycheck, and he said, no, i'd rather see my baby born. >> that definitely is, you know, something that's admirable that he did, but there aren't many guys i think wouldn't do that out there. there are a lot of great guys, family is very important to them. >> rose: most of them would have done it? >> most.
>> rose: 50%. >> way more than 50%. i would be surprised if anybody would not-- especially first child birth. >> rose: yeah. congratulations. .>> thank you very much. >> rose: this is really-- i mean, i look at these names and you think of people and you think of what they mean, ben hogan and sam snead and all the people who have won the p.g.a., tiger woods and everybody but tom watson. tom watson never won the p.g.a. >> unfortunately, no, but -- >> good career, though. >> very good career. but it's pretty neat to be part of the history of golf, the history of the p.g.a. championship. my name will always be on there, whether i win more of them or you never hear from me again. the name will always be on there. so that's pretty neat. >> rose: i suspect we'll hear from you again because it gets better and better every year, doesn't it? >> it has been lately. >> rose: since 2009. >> yes. >> rose: thank you, jason. >> yes, thank you. >> rose: thank you for joining us. see you next time.